Auburn National Bancorporation, Inc. (Nasdaq: AUBN) reported net
earnings of $1.7 million, or $0.47 per share, for the second
quarter of 2020, compared to $2.3 million, or $0.64 per share, for
the second quarter of 2019. Net earnings for the first six
months of 2020 were $3.5 million, or $0.97 per share, compared to
$4.9 million, or $1.35 per share, for the first six months of 2019.
“Our immediate focus remains on the health,
wellbeing, and safety of our employees, customers, and our
communities. We continue to serve customers through drive-thru
locations and have begun a phased approach to opening previously
closed branches by guidance from the CDC, State Departments of
Health and other governing bodies. Despite a challenging operating
environment due to COVID-19, I am very pleased with our
organization’s response,” said Robert W. Dumas, Chairman,
President, and CEO.
“Our participation in the Paycheck Protection
Program was a valuable source of support for our customers and
communities. Through June 30, 2020, we funded
$36.5 million in loans for our customers, which helped support
approximately 5,500 employees in our markets.
“While a great deal of uncertainty remains
regarding the duration of the pandemic, we believe the Company’s
strong balance sheet is well positioned to continue supporting our
customers and communities through this crisis,” said Mr. Dumas.
Net interest income (tax-equivalent) was $6.2
million for the second quarter of 2020, a decrease of 8% compared
to $6.7 million for the second quarter of 2019. This decrease
was primarily due to the lower rate environment, including a 150
basis point reduction in the Fed Funds rate that occurred late in
the first quarter of 2020.
Net interest margin (tax-equivalent) decreased to
2.95% in the second quarter of 2020, compared to 3.50% for the
second quarter of 2019 primarily due to the lower interest rate
environment and changes in our asset mix resulting from the
significant short-term liquidity increase in customer deposits.
At June 30, 2020, the Company’s allowance for loan losses was
$5.3 million, or 1.14% of total loans, compared to $4.4 million, or
0.95% of total loans, at December 31, 2019 and $4.9 million, or
1.02% of total loans, at June 30, 2019. At June 30, 2020, the
Company’s allowance for loan losses was 1.24% of total loans,
excluding PPP loans.
The provision for loan losses was $450 thousand for the second
quarter of 2020, compared to no provision for loan losses during
the second quarter of 2019. The increase in the provision for
loan losses was related to adverse changes in economic conditions
driven by the COVID-19 pandemic, including higher unemployment in
our primary market area. The provision for loan losses is
based upon various estimates and judgments, including the absolute
level of loans, economic conditions, loan growth, credit quality
and the amount of net charge-offs.
Through June 30, 2020, we have granted loan payment deferrals or
payments of interest only on loans totaling $112.7 million, or 24%
of total loans. In addition, we have identified certain
commercial sectors with enhanced risk resulting from the impact of
COVID-19. Loans within these sectors represent 68% of the
Company’s total COVID-19 related modifications at June 30,
2020. See table below for a summary of loans outstanding for
these sectors at June 30, 2020.
|
|
Portfolio Segment |
|
|
|
(In
thousands) |
|
Commercial and industrial |
Construction and land development |
Commercial real estate |
|
Total |
% of Total Loans |
June 30, 2020: |
|
|
|
|
|
|
|
|
Hotel/motel |
$ |
1,566 |
8,536 |
43,183 |
$ |
52,472 |
11 |
% |
Shopping centers |
|
19 |
— |
33,872 |
|
33,891 |
7 |
|
Retail, excluding shopping
centers |
|
428 |
161 |
17,725 |
|
18,314 |
4 |
|
Restaurants |
|
1,562 |
— |
13,605 |
|
15,167 |
4 |
|
Total |
$ |
3,575 |
8,697 |
108,385 |
$ |
119,844 |
26 |
% |
|
|
|
|
|
|
|
|
|
The Company extended a total of $36.5 million in loans to 422
small businesses under the Small Business Administration’s Paycheck
Protection Program during the second quarter of 2020. We
collected approximately $1.5 million in fees related to our PPP
loans, which will be recognized net of related costs, as a yield
adjustment over the life of the underlying PPP loans.
Noninterest income was $1.4 million in the second quarter of
2020 and $0.9 million in the second quarter of 2019. The
increase was primarily due to an increase in mortgage lending
income as lower interest rates for mortgage loans positively
affected refinance activity and pricing margins improved.
Noninterest expense was $5.0 million in the second quarter of
2020 compared to $4.6 million during the second quarter of
2019. The increase was mainly due to $0.5 million of various
expenses related to the redevelopment of the Company’s headquarters
in downtown Auburn, including revised depreciation estimates and
temporary relocation costs.
Income tax expense was $0.4 million for the second quarter of
2020 compared to $0.5 million during second quarter of 2019.
The Company's effective tax rate for the second quarter of 2020 was
17.93%, compared to 19.14% in the second quarter of 2019.
The Company paid cash dividends of $0.255 per share in the
second quarter of 2020, an increase of 2% from the same period in
2019. At March 31, 2020, the Bank’s regulatory capital ratios
were well above the minimum amounts required to be “well
capitalized” under current regulatory standards.
About Auburn National Bancorporation,
Inc.
Auburn National Bancorporation, Inc. (the “Company”) is the
parent company of AuburnBank (the “Bank”), with total assets of
approximately $943 million. The Bank is an Alabama state-chartered
bank that is a member of the Federal Reserve System, which has
operated continuously since 1907. Both the Company and the Bank are
headquartered in Auburn, Alabama. The Bank conducts its business in
East Alabama, including Lee County and surrounding areas. The Bank
operates eight full-service branches in Auburn, Opelika, Valley,
and Notasulga, Alabama. The Bank also operates loan
production offices in Auburn and Phenix City, Alabama. Additional
information about the Company and the Bank may be found by visiting
www.auburnbank.com.
Cautionary Notice Regarding Forward-Looking
Statements
This press release contains “forward-looking statements” within
the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934, including, without limitation, statements
about future financial and operating results, costs and revenues,
the effects of the COVID-19 pandemic, including economic conditions
generally and in our markets, loan demand, mortgage lending
activity, changes in the mix of our earning assets (including those
generating tax exempt income) and our deposit and wholesale
liabilities, net interest margin, yields on earning assets,
securities valuations and performance, interest rates (generally
and those applicable to our assets and liabilities), loan
performance, loan deferrals, nonperforming assets, other real
estate owned, provision for loan losses, charge-offs,
other-than-temporary impairments, collateral values, credit
quality, asset sales, insurance claims, and market trends, as well
as statements with respect to our objectives, expectations and
intentions and other statements that are not historical
facts. Actual results may differ from those set forth in the
forward-looking statements.
Forward-looking statements, with respect to our beliefs, plans,
objectives, goals, expectations, anticipations, estimates and
intentions, involve known and unknown risks, uncertainties and
other factors, which may be beyond our control, and which may cause
the actual results, performance, achievements, or financial
condition of the Company or the Bank to be materially different
from future results, performance, achievements, or financial
condition expressed or implied by such forward-looking
statements. You should not expect us to update any
forward-looking statements.
All written or oral forward-looking statements attributable to
us are expressly qualified in their entirety by this cautionary
notice, together with those risks and uncertainties described in
our annual report on Form 10-K for the year ended December 31,
2019 and otherwise in our other SEC reports and filings.
Explanation of Certain Unaudited Non-GAAP Financial
Measures
This press release contains financial information determined by
methods other than U.S. generally accepted accounting principles
(“GAAP”). The attached financial highlights include certain
designated net interest income amounts presented on a
tax-equivalent basis, a non-GAAP financial measure, and the
presentation and calculation of the efficiency ratio, a non-GAAP
measure. Management uses these non-GAAP financial measures in its
analysis of the Company’s performance and believes the presentation
of net interest income on a tax-equivalent basis provides
comparability of net interest income from both taxable and
tax-exempt sources and facilitates comparability within the
industry. Similarly, the efficiency ratio is a common measure
that facilitates comparability with other financial
institutions. Although the Company believes these non-GAAP
financial measures enhance investors’ understanding of its business
and performance, these non-GAAP financial measures should not be
considered an alternative to GAAP. Along with the attached
financial highlights, the Company provides reconciliations between
the GAAP financial measures and these non-GAAP financial
measures.
For additional information, contact:Robert W. DumasChairman,
President and CEO(334) 821-9200
Financial
Highlights (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 30, |
|
|
Six months ended June 30, |
|
(Dollars in thousands, except per share amounts) |
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
Results
of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income (a) |
$ |
6,197 |
|
|
$ |
6,742 |
|
|
$ |
12,529 |
|
|
$ |
13,508 |
|
Less:
tax-equivalent adjustment |
|
127 |
|
|
|
145 |
|
|
|
247 |
|
|
|
291 |
|
|
Net interest income (GAAP) |
|
6,070 |
|
|
|
6,597 |
|
|
|
12,282 |
|
|
|
13,217 |
|
Noninterest income |
|
1,363 |
|
|
|
885 |
|
|
|
2,598 |
|
|
|
2,045 |
|
|
Total revenue |
|
7,433 |
|
|
|
7,482 |
|
|
|
14,880 |
|
|
|
15,262 |
|
Provision for loan
losses |
|
450 |
|
|
|
— |
|
|
|
850 |
|
|
|
— |
|
Noninterest
expense |
|
4,959 |
|
|
|
4,629 |
|
|
|
9,815 |
|
|
|
9,240 |
|
Income
tax expense |
|
363 |
|
|
|
546 |
|
|
|
753 |
|
|
|
1,172 |
|
Net earnings |
$ |
1,661 |
|
|
$ |
2,307 |
|
|
$ |
3,462 |
|
|
$ |
4,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
net earnings: |
$ |
0.47 |
|
|
$ |
0.64 |
|
|
$ |
0.97 |
|
|
$ |
1.35 |
|
Cash dividends
declared |
$ |
0.255 |
|
|
$ |
0.25 |
|
|
$ |
0.51 |
|
|
$ |
0.50 |
|
Weighted average
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
3,566,166 |
|
|
|
3,577,409 |
|
|
|
3,566,156 |
|
|
|
3,595,972 |
|
Shares
outstanding, at period end |
|
3,566,176 |
|
|
|
3,571,828 |
|
|
|
3,566,176 |
|
|
|
3,571,828 |
|
Book value |
$ |
29.53 |
|
|
$ |
26.34 |
|
|
$ |
29.53 |
|
|
$ |
26.34 |
|
Common stock
price: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
$ |
63.40 |
|
|
$ |
39.55 |
|
|
$ |
63.40 |
|
|
$ |
39.55 |
|
|
Low |
|
36.81 |
|
|
|
31.06 |
|
|
|
24.11 |
|
|
|
30.61 |
|
|
Period-end: |
|
57.09 |
|
|
|
33.50 |
|
|
|
57.09 |
|
|
|
33.50 |
|
|
|
To earnings ratio |
|
24.29 |
x |
|
|
13.19 |
x |
|
|
24.29 |
x |
|
|
13.19 |
x |
|
|
To book value |
|
193 |
% |
|
|
127 |
% |
|
|
193 |
% |
|
|
127 |
% |
Performance
ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
equity (annualized) |
|
6.34 |
% |
|
|
10.00 |
% |
|
|
6.78 |
% |
|
|
10.65 |
% |
Return on average
assets (annualized) |
|
0.74 |
% |
|
|
1.12 |
% |
|
|
0.80 |
% |
|
|
1.18 |
% |
Dividend payout
ratio |
|
54.26 |
% |
|
|
39.06 |
% |
|
|
52.58 |
% |
|
|
37.04 |
% |
Other financial
data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
margin (a) |
|
2.95 |
% |
|
|
3.50 |
% |
|
|
3.09 |
% |
|
|
3.52 |
% |
Effective income
tax rate |
|
17.93 |
% |
|
|
19.14 |
% |
|
|
17.86 |
% |
|
|
19.46 |
% |
Efficiency ratio
(b) |
|
65.60 |
% |
|
|
60.69 |
% |
|
|
64.88 |
% |
|
|
59.41 |
% |
Asset
Quality: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming (nonaccrual) loans |
$ |
678 |
|
|
$ |
131 |
|
|
$ |
678 |
|
|
$ |
131 |
|
|
Other real estate owned |
|
— |
|
|
|
303 |
|
|
|
— |
|
|
|
303 |
|
|
|
Total nonperforming assets |
$ |
678 |
|
|
$ |
434 |
|
|
$ |
678 |
|
|
$ |
434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
(recoveries) |
$ |
9 |
|
|
$ |
(43) |
|
|
$ |
(72) |
|
|
$ |
(61) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses as a % of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
1.14 |
% |
|
|
1.02 |
% |
|
|
1.14 |
% |
|
|
1.02 |
% |
|
Nonperforming loans |
|
783 |
% |
|
|
3,703 |
% |
|
|
783 |
% |
|
|
3,703 |
% |
Nonperforming assets as a % of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and other real estate owned |
|
0.15 |
% |
|
|
0.09 |
% |
|
|
0.15 |
% |
|
|
0.09 |
% |
|
Total assets |
|
0.07 |
% |
|
|
0.05 |
% |
|
|
0.07 |
% |
|
|
0.05 |
% |
Nonperforming loans as a % of total loans |
|
0.15 |
% |
|
|
0.03 |
% |
|
|
0.15 |
% |
|
|
0.03 |
% |
Annualized net charge-offs (recoveries) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as a % of average loans |
|
0.01 |
% |
|
|
(0.04) |
% |
|
|
(0.03) |
% |
|
|
(0.03) |
% |
Selected
average balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
291,333 |
|
|
$ |
243,784 |
|
|
$ |
274,325 |
|
|
$ |
241,914 |
|
Loans, net of
unearned income |
|
466,971 |
|
|
|
473,281 |
|
|
|
459,091 |
|
|
|
475,297 |
|
Total assets |
|
893,720 |
|
|
|
821,706 |
|
|
|
866,222 |
|
|
|
824,409 |
|
Total
deposits |
|
782,381 |
|
|
|
725,263 |
|
|
|
646,899 |
|
|
|
728,881 |
|
Total
stockholders' equity |
$ |
104,820 |
|
|
$ |
92,272 |
|
|
$ |
102,190 |
|
|
$ |
91,110 |
|
Selected period
end balances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
$ |
302,193 |
|
|
$ |
248,813 |
|
|
$ |
302,193 |
|
|
$ |
248,813 |
|
Loans, net of
unearned income |
|
464,274 |
|
|
|
476,061 |
|
|
|
464,274 |
|
|
|
476,061 |
|
Allowance for loan
losses |
|
5,308 |
|
|
|
4,851 |
|
|
|
5,308 |
|
|
|
4,851 |
|
Total assets |
|
942,887 |
|
|
|
839,178 |
|
|
|
942,887 |
|
|
|
839,178 |
|
Total
deposits |
|
829,810 |
|
|
|
740,501 |
|
|
|
829,810 |
|
|
|
740,501 |
|
Total
stockholders' equity |
$ |
105,299 |
|
|
$ |
94,065 |
|
|
$ |
105,299 |
|
|
$ |
94,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Tax equivalent. See “Explanation of Certain Unaudited Non-GAAP
Financial Measures” and “Reconciliation of GAAP |
|
|
to non-GAAP Measures (unaudited).” |
|
(b) Efficiency ratio is the result of noninterest expense divided
by the sum of noninterest income and tax-equivalent |
|
|
net interest
income. |
|
Reports Second Quarter Net Earnings/page 5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of GAAP to non-GAAP Measures (unaudited): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 30, |
|
Six months ended June 30, |
(Dollars in thousands, except per share amounts) |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
Net
interest income, as reported (GAAP) |
$ |
6,070 |
|
$ |
6,597 |
|
$ |
12,282 |
|
$ |
13,217 |
Tax-equivalent adjustment |
|
127 |
|
|
145 |
|
|
247 |
|
|
291 |
Net interest income (tax-equivalent) |
$ |
6,197 |
|
$ |
6,742 |
|
$ |
12,529 |
|
$ |
13,508 |
|
|
|
|
|
|
|
|
|
|
|
|
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